Category Archives: markets

What’s in Store

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…for the rest of us.  Kate Vershov Downing is a Liberal who has been mugged by reality.  She is—or was until she resigned—a member of the Palo Alto, CA, Planning and Transportation Commission, the city’s central planning facility for all things a private citizen might want to do.  Here’s an excerpt from her letter of resignation from that Commission, via PJMedia‘s Tom Knighton.  (Unfortunately, she’s not completely learned the mugging lesson; she and her husband are moving to another California city.)

After many years of trying to make it work in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here. We rent our current home with another couple for $6200 a month; if we wanted to buy the same home and share it with children and not roommates, it would cost $2.7M and our monthly payment would be $12,177 a month in mortgage, taxes, and insurance. That’s $146,127 per year—an entire professional’s income before taxes. This is unaffordable even for an attorney and a software engineer.

There’s more—much more—in her letter of resignation.

It’s clear that if professionals like me cannot raise a family here, then all of our teachers, first responders, and service workers are in dire straits. We already see openings at our police department that we can’t fill and numerous teacher contracts that we can’t renew because the cost of housing is astronomical not just in Palo Alto but many miles in each direction.

But Palo Alto’s fellow commission members, Liberal Planners all, either don’t care, don’t understand, or perhaps worst of all: they got theirs, and the rest can go hang.

Small steps like allowing 2 floors of housing instead of 1 in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices), would go a long way in adding desperately needed housing units while maintaining the character of our neighborhoods and preserving historic structures throughout.

But the P&T Commission as a whole Knows Better and has steadfastly refused to allow private citizens, private enterprises, to do these simple things.

This Council has…charted a course for the next 15 years of this city’s development….

Because the Commission members are fortune tellers and seers; they Know what’s going to happen before it happens.

Downing closed with this bit of irony:

We should take care to remember that Palo Alto is famous the world over for its residents’ accomplishments, but none of those people would be able to live in Palo Alto were they starting out today.

This Know Better attitude is what we can look forward to nation-wide if the Progressive-Democrat Party wins the White House this year and with it the Senate.

Prior Restraint

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The EU has it.  And it doesn’t hesitate to reach overseas to try to inflict it outside EU jurisdiction.

The European Union’s antitrust authority on Thursday opened a full-blown investigation into plans by Dow Chemical Co and DuPont Co to merge, on concerns the deal would reduce competition [in] the global agricultural sector.

The European Commission said it would investigate whether the deal may reduce competition in areas such as crop protection, seeds, and certain petrochemicals. Announced in December, the proposed merger aims to create an American industry giant with a combined market cap of about $122 billion.

Never mind that the EU, like the US, has plenty of laws with which to deal with actual anti-competitive or monopoly abuse behaviors.  Never mind that prior restraint is destructive of innovation and of competition.

Never mind that this is an American merger between American companies, or that global markets reach far beyond the EU while the EU’s legal reach is limited to the EU.

Here’s a thought, one that takes advantage of the wide world beyond parochial Europe.  Dow and DuPont should simply ignore the EU and merge if they think that makes sense.  And then contribute to that global competition reduction by walking away from Europe (save post-leave Great Britain) and focus their competitive and innovative efforts on that wide world.

A Free Speech Ruling

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The Federal trial judge got this one right, even though the Arkansas law had been on the books for 35 years.  The question concerned whether the State could restrict political speech by robocall with the mechanism of banning political robocalls.  The same statute did not ban other political calls, only robocalls, and the judge called them on that logical conflict.

The statute is underinclusive. Banning calls made through an automated telephone system in connection with a political campaign cannot be justified by saying that the ban is needed to residential privacy and public safety when no limit is placed on other types of political calls that also may intrude on residential privacy or seize telephone lines.

There’s a larger question here, too, though.  Once we begin limiting political speech, where does it stop?  What’s the limiting principle?  What naturally limits the thing, without relying on government forbearance?  One such limit mentioned in the ruling concerns signs containing political speech.  The signs cannot be banned, but their placement can be restricted based on safety concerns (for instance, visually blocking views of crossing traffic at intersections).  Robocalls, irritating as they are, don’t present themselves as usefully limitable, given the importance of free political speech and (incumbent) government attempts to restrict it, other than an Arkansas averred

prevent[ion of] the seizure of phone lines, which could interfere with emergency calls being placed or received.

However, as the judge noted,

The Attorney General fails to explain why automated calls other than commercial calls and those made in connection with political campaigns—for example, calls encouraging individuals to contact a member of Congress regarding a bill or to attend a townhall meeting regarding a public issue—using automated dialing systems do not trample upon the state’s interests in residential privacy and public safety.

The State’s safety claim doesn’t hold water.

And so, again I ask, when it comes to government limiting speech, particularly political speech, where does it stop?  What’s the limiting principle?  Safety certainly can be one such limit, but Arkansas’ law doesn’t—didn’t—apply it.

The judge’s opinion can be seen here.

Government’s Market Interference

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I wrote about this matter just a bit ago.  Now DoJ has gone ahead and filed its lawsuits seeking to block the mergers between Anthem Inc and Cigna Corp and between Aetna Inc and Humana Inc.  Attorney General Loretta Lynch’s rationale for this is this:

If these mergers were to take place, the competition among these insurers that has pushed them to provide lower premiums, higher quality care and better benefits would be eliminated[.]

And

They would leave much of the multi-trillion dollar health insurance industry in the hands of three mammoth insurance companies, and restricting companies, and restricting competition in key markets[.]

The one is mere speculation, and the other is prior restraint.  It’s certainly true that the mergers would create very large companies and leave fewer of them in the market.  But to say that this must reduce competition is just a guessing game, especially since Lynch declined to say—as her predecessors have declined to say, and as economists cannot say—what the minimum number of enterprises must be in any industry for there to be competition.  Indeed, absent collusion, which is illegal, two companies are driven to compete with each other by the economic forces extant in a free market.

Never mind, either, that as Lynch knows full well, that what’s illegal in America, what’s illegal under our antitrust laws—and all that’s necessary to be illegal—is abuse of monopoly power, not the existence of it.  As with the rest of our laws in a free country, these companies must actually commit the misbehavior before they can be sanctioned for it.

On the other hand, Government does allow protected monopolies—Ma Bell before its court-ordered breakup is one example.  A protected monopoly is a monopoly that is explicitly protected by Government: the monopoly is allowed to exist, and it is overtly protected from competition, in return for which the monopoly agrees to be heavily regulated by Government, including the prices it’ll be allowed to charge and the services it’ll be allowed to provide.  Indeed, protected monopolies are textbook examples of regulatory capture—only two-sided: the monopoly and the regulators have captured each other.

Lynch’s action, though, is an abuse of our antitrust laws; it’s nothing more than the Democrats’ campaign of lawfare.  Given the nature of Obamacare, though, maybe this protected monopoly/regulatory mutual capture is this administration’s final goal for health insurance companies.  That would be both a further effort to nationalize our private companies and an example of this administration’s view that it can control the capture.

This sort of behavior, too, emphasizes that the coming election will have consequences, not only for the White House, Congress, and the Supreme Court, it’ll have consequences for the nation’s Department of Justice and the other Executive Branch Cabinets and Agencies (and for our lower courts).

All of this, in the end, is motivated in part by individual Progressive-Democrats’ grasping for personal gain.

It is, though, even more strongly motivated by Progressive-Democrats’ collective contempt for their Lessers, us poor, dumb, plebeian Americans.

[T]he average American individual is morally and intellectually inadequate to serious and consistent conception of his responsibilities as a democrat.

But That’s The Point

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Bill Baer, Assistant Attorney General for the United States Department of Justice Antitrust Division, on the proposed mergers between Anthem Inc and Cigna Corp and between Aetna Inc and Humana Inc, called them “game-changers” and added that it was necessary for Government to interfere with the mergers

to make sure we aren’t making a mistake in which shareholders benefit and the consumers pay the cost.

It’s certainly true that consumers should be protected from fraudulent behaviors and from price gouging.  However, it is those consumers who, as customers, pay for the goods and services companies provide—which ultimately pays those shareholders, too—else the companies don’t survive, and the consumer/customer has no good or service available to buy.

And that’s true whether consumers operate in a free market or in a corporate fascist or any other socialist market.  Consumers either pay directly, based on their own choice (including their choice not to buy at all), or every consumer pays (with no choice at all) for the one, in the form of taxes which government uses to prop up the companies it’s found suitable to exist.

In a free market, too, the company’s owners should be the ones who benefit; indeed, our laws recognize that: a company’s managers owe their fiduciary duty to their employers—those shareholders.

But with this administration, Government Knows Better.